Safaricom and its partners have signed an agreement to borrow $500 million from the US International Development Finance Corporation to fund expansion to Ethiopia’s telco market.
Safaricom formed a joint venture with Vodafone Group Plc and Vodacom Group Limited to bid for one of the two telecommunications licences being auctioned in Ethiopia. Safaricom has a 51% stake with Vodacom owning a 5% stake and the rest spread among other investors.
The investment needed to break into the Ethiopian market is expected to top the $1 billion mark and this $500 million loan from the US International Development Finance Corporation is part of the fundraising efforts.
The loan from the DFC usually mature between 5 to 25 years and the repayment schedules are set on either quarterly or semi-annual basis.
The Ethiopian market is catnip for investors that are itching to capitalize on the country’s huge population of 100 million people. Ethio Telecom has been the single telecommunications provider in the country and opening up the industry to other players has led to interest from major players in the region. This includes the Safaricom led consortium, MTN, Etisalat, Saudi Telecom, Telkom SA, Axian, Liquid Telecom, Snail Mobile, Kandu Global Communications and Electromecha International Projects.
Safaricom has being eyeing the Ethiopia market for a while and this started over a year ago when Ethiopia intended to break up Ethio Telecom’s monopoly. In 2020, Safaricom has spent time pursuing its entry to this market and this huge loan might help them clinch that.